by Greg Toppo, USATODAY

by Greg Toppo, USATODAY

A mother at the center of a human resources gaffe by AOL Chief Executive Tim Armstrong that went viral said the CEO apologized to her in a "heartfelt" phone call over the weekend.

But novelist Deanna Fei said Armstrong's mention of her pre-term infant as one of two "distressed babies" that cost the company millions of dollars in insurance expenses was "a violation of my family's privacy" and "a complete dehumanization of my daughter."

Armstrong last week prompted protests from AOL employees when he said during a "town hall" that AOL's move to scale back its 401(k) contribution match was due to higher medical costs associated with the Affordable Care Act, or Obamacare and because of the 2012 births of two "distressed babies" of AOL employees. Armstrong told the workers, "we paid a million dollars each to make sure those babies were OK in general," according to a transcript of the meeting.

On Sunday, Fei, the mother of one of the children, and the spouse of an AOL employee, wrote a first-person account in the online magazine Slate of the unexpected premature birth of her daughter. Fei revealed that the child was one of the two "distressed babies" cited by Armstrong.

The child was born nearly four months premature in October 2012, weighing only 1 pound, 9 ounces, according to Fei. Her baby spent three months in neonatal intensive care and "endured more procedures than I can count: blood transfusions, head ultrasounds, the insertion of breathing tubes, feeding tubes, and a central line extending nearly to her heart," Fei said.

Fei said she didn't take issue with Armstrong's million-dollar figure but "how he reduced my daughter to a 'distressed baby' who cost the company too much money." Fei called the rationale "an absurd justification for corporate cost-cutting," saying Armstrong's statement implied "that the saving of her life was an extravagant option, an oversize burden on the company bottom line."

Fei told NBC News Monday that she was hurt by the implication that she and her family were "greedy consumers of health care benefits, that we had kind of gobbled up more than our share of the pie." She didn't name her husband, but The New York Times identified him as Peter Goodman, an editor at AOL's Huffington Post. Goodman is a former Times financial reporter.

She said she spoke with Armstrong privately over the weekend and said he apologized. "He spoke to me in a heartfelt way as a father of three kids, to a fellow parent," she told NBC. "His apology was heartfelt and I appreciated it - and I do forgive him and I understand that we all sometimes say things that we wish we could take back."

Fei on Monday told NBC, "I don't think Tim Armstrong meant to hurt our family" but said she came forward because she felt she needed to defend her daughter, who is developing well and has just begun walking. "I felt like someone has to speak up for her," Fei said. "She can't tweet, she can't go on TV to defend herself. She can't justify the spending that saved her life. She didn't deserve to get singled out in this way."

Even with Armstrong's apology, AOL may not be past the unfortunate incident. Attorney Mary Harrison of Buck Consultants, a New York-based human resources consulting firm, said there's a small chance Armstrong's "distressed babies" comment could draw fines for AOL's insurance company if the federal government can prove that someone who passed the details of the babies' treatment to Armstrong violated the Health Insurance Portability and Accountability Act. The 1996 law protects patients' privacy.

While Armstrong didn't reveal specific details about Fei's baby, such as the name or circumstances of her birth, the fact that co-workers could use their knowledge of the family's trauma and connect it to Armstrong's public comments essentially amounts to a breach of protected health information, she said.

"This is one where you cannot put the genie back in the bottle," Harrison said.

At last week's employee meeting, Armstrong said AOL would change its 401(k) contribution match to a lump sum at the end of each year instead of paycheck to paycheck. That meant workers who left before Dec. 31 would miss a matching contribution for the year.

Armstrong later reversed the 401(k) switch. In a note to employees, he said, "The leadership team and I listened to your feedback over the last week. We heard you on this topic." He also apologized for the "distressed babies" comment, saying, "I made a mistake."

It's not the first time Armstrong has made news with human resources issues. During an August conference call with employees of AOL's Patch.com local news operation, listeners heard Armstrong interrupt his remarks to fire the operation's creative director, who had been snapping a picture of him. Armstrong later apologized.